FirstGroup, Stagecoach in East Coast train war

Aberdeen-based FirstGroup has been granted approval by the Office of Rail and Road (ORR) to launch “open access” rail services between London, north-east England and Edinburgh offering an average fare of less than £25.

Perth-based Stagecoach said the approval could have an impact on revenue at its 90%-owned Virgin Trains East Coast business and that it will now assess the ORR decision and implications in detail and review its options.

The ten-year track access rights approved by the ORR will allow FirstGroup’s East Coast Trains to begin operating five trains a day each way from London King’s Cross to Edinburgh, via Stevenage, Newcastle and Morpeth by 2021.

The ORR also approved an application by Virgin Trains East Coast, in which Stagecoach has a 90% shareholding, to run new services between London and Edinburgh, Harrogate, Lincoln and Middlesbrough.

These services formed part of Virgin Trains East Coast’s successful bid for the East Coast rail franchise, which started in March 2015 and is planned to run until at least 31 March 2023.

However, Stagecoach said the ORR decision allowing the new FirstGroup Edinburgh-London services is expected to have an impact on revenue at Virgin Trains East Coast.

“With respect to the decision on open access between London and Edinburgh, we do not believe the granting of these services within a franchised system and without a level playing field is in the best interests of passengers, taxpayers or communities,” said Stagecoach chief executive Martin Griffiths.

“We will assess the ORR decision and implications in detail and review our options.”

FirstGroup chief executive Tim O’Toole said: “Our new service will widen the choice of travel options between these cities and offer an attractive alternative to those available today.

“We will offer genuinely low fares at half the average price of today, while adding significant benefits to the UK economy.

“Our brand new trains will be cheaper than other rail services, greener than the plane, quicker than the coach and will get passengers from London to Edinburgh earlier than they can arrive today, all for an average fare of less than £25.

“Now that our application has been approved and we have been granted rights we will implement the next steps to deliver our proposals which include discussions with Network Rail and rolling stock manufacturers.”

John Larkinson, the ORR’s Director of Railway Markets and Economics said: “These new train services will give passengers more choice on services to Edinburgh and London and provide more frequent trains to towns and cities which are not so well served by rail today …

“Our decision has been informed by extensive analysis, formal industry hearings and detailed engagement with all parties.

“We have carefully weighed up the potential passenger benefits and the financial impacts on existing operators and the government, as we are required to do by law.”